Common Stock: Coral Gold Resources (TSXV: CLH)
Current Market Price: $1.18 CAD
Market Capitalization: $54.6 million CAD
**Note: All values in this article are expressed in Canadian Dollars (CAD) unless otherwise noted.
Coral Gold Resources Stock – Summary of the Company
Coral Gold Resources is a precious metals exploration company focused on the acquisition, exploration, and development of mineral properties. The company owns several exploration stage properties located in Nevada and California. Coral Gold was founded in 1988 and is headquartered in Vancouver Canada.
Revenue and Cost Analysis
Coral Gold does not have any properties that are currently producing and therefore does not have any revenue. The company consistently runs an operating loss and is likely to continue to do so for the foreseeable future.
For the fiscal year 2019 Coral Gold had a net loss of $532 thousand. Their largest expenses were compensation related, including share based compensation.
Coral Gold Resources – Royalty and Streaming Agreements
Several of the properties the company owns in Nevada are subject to net smelter royalties ranging from 4% to 10%.
Coral Gold owns a sliding scale, 1% to 2.5%, net smelter royalty on the Robertson property in Nevada, which it sold to Barrick Gold in 2017.
Balance Sheet Analysis
Coral Gold has a strong balance sheet. They have a solid liquidity position and very low liability levels.
Coral Gold Resources – Debt Analysis
As of fiscal year end 2019, the company does not have any debt outstanding.
Coral Gold Resources Stock – Share Dynamics and Capital Structure
As of May 2020, Coral Gold has 46.1 million common shares outstanding. In addition they have 4.6 million options outstanding. Fully diluted shares outstanding is around 50.7 million shares.
Coral Gold Resources Stock – Dividends
The company does not currently pay a dividend and is unlikely to do so for the foreseeable future.
Management – Skin in the game
Insiders at Coral Gold have not made any relevant transactions in the company’s stock recently, providing no signal to investors.
Coral Gold Resources Stock – 3 Metrics to Consider
Debt to Equity Ratio
Total Liabilities/Total Share Holder Equity
$115 thousand / $18.1 million = .01
A debt to equity ratio of .01 indicates that Coral Gold uses almost no debt in its capital structure and relies almost entirely on equity financing to fund itself.
Working Capital Ratio
Current Assets/Current Liabilities
$11 million / $73 thousand = 155
A working capital ratio of 155 indicates an extremely strong liquidity position. Coral Gold should not have a problem meeting its near term obligations.
Price to Book Ratio
Current Share Price/Book Value per Share.
$1.18/$0.36 = 3.3
Based on fully diluted shares outstanding Coral Gold has a book value per share of $0.36. At the current market price this implies a price to book ratio of 3.3 meaning the company’s stock currently trades at a premium to the book value of the company.
Gold Market – Economic Factors and Competitive Landscape
Gold mining is a highly competitive, capital intensive business. The company will need to compete fiercely for both new projects and capital. However, given the current economic environment of global money printing and zero or negative interest rates, it would appear gold companies are poised to benefit from a strong economic tailwind.
Coral Gold Resources Stock – Summary and Conclusions
Coral Gold is in a sound position financially. They have a strong liquidity position and a reasonable amount of liabilities/ burn rate. Their capital structure is not overly dilutive. The company’s most interesting asset is a royalty from the sale of a property in Nevada. They also have several early exploration projects, which they aren’t investing in significantly.
Overall I don’t see a reason to invest in Coral Gold Resources stock. Their royalty is intriguing, but I would prefer to invest in exploration companies that are actually exploring, for example Orefinders. I will leave Coral Gold on my watchlist, to see if any of their projects make significant progress. If they do advance any of their projects, I will reconsider my investment decision.
Disclaimer
This is not investment advice. Nothing in this analysis should be construed as a recommendation to buy, sell, or otherwise take action related to the security discussed. If I own a position in the security discussed, I will clearly state it.
This is not intended to be a comprehensive analysis and you should not make an investment decision based solely on the information in this analysis. I hope this serves as a useful starting point for a more comprehensive analysis, and hopefully draws attention to aspects of the company that were overlooked or merit further investigation. This is by no means intended to be a complete analysis. Again, this is not investment advice, do your own research.
